Emerging tech driving US technology industry

Broader adoption of the Internet of Things (IoT) and enthusiasm for emerging technology will drive the US consumer technology industry to $286.6 billion (€260.6bn) in retail revenues ($224 billion wholesale) in 2016, according to the Consumer Technology Association’s (CTA) semi-annual forecast. The latest version of CTA’s industry report, US Consumer Technology Sales and Forecasts, says sales of burgeoning tech products such as wearables, smart home devices and drones will deliver an increase of 1.3 percent over last year’s industry revenues.

“We’re in the midst of a critical transition period, as more IoT products offer the anytime/anywhere access and seamless experiences that today’s consumers want and need,” said Gary Shapiro, president and CEO, CTA. “This is a pivotal point in consumer technology history, as emerging tech categories – virtual reality, voice-controlled digital assistants, drones – push the entire industry forward. And the value of these innovations goes far beyond entertainment– today’s technology is changing our lives for the better.”

The five largest categories of the tech industry, including smartphones, tablets, LCD televisions, laptops and desktop computers, will collectively contribute $114 billion – or 51 per cent – to the tech industry’s revenue this year, and smartphones and TVs will be responsible for most of that growth in 2016. However, in 2017, for the first time in several years, these five categories combined will account for a little less than half of industry revenue.

CTA is the nation’s largest tech trade association, and its consensus forecast reflects US factory sales to dealers for more than 300 tech products. The semi-annual report serves as a benchmark for the consumer technology industry, charting the size and growth of underlying categories.

Emerging Technology Categories:

4K Ultra High-Definition (4K UHD) ecosystem: 2016 will be a flagship year for 4K UHD TVs, driven in part by the market introduction of next-generation technologies like HDR. CTA expects shipments of 4K UHD displays will reach 15 million units (a 105 per cent increase), and revenue will exceed $12.9 billion (a 69 per cent increase). New to the market in 2016, 4K UHD Blu-ray players will further build the 4K UHD ecosystem with 700,000 units sold and $63 million in revenue.

Wearables: Driven by the popularity of fitness activity trackers, unit sales of all wearables in 2016 are forecast to reach almost 48 million units (a 39 per cent increase). Fitness activity tracker volumes will hit 28 million units in 2016 – a 60 per cent increase from 2015 – with revenues reaching $2.2 billion – a 62 per cent increase. After a year of strong growth, smartwatch unit growth is slowing, while revenue will decline for the first time. Units are expected to increase 15 per cent to 12.2 million units, earning $2.8 billion in revenue, a decline of eight per cent.

Virtual Reality (VR): With several global tech leaders introducing VR headsets to the consumer market in 2016, CTA expects this to be the tech sector’s overwhelming leader in year-to-year growth. Unit sales will increase by 296 per cent over last year, reaching 800,000 units sold. Total revenues are projected to reach $432 million, a 332 per cent increase this year.

Digital Assistant Devices: This is the first year the semi-annual CTA report has included projections for voice-activated device that provides a cloud-based artificial intelligence-powered virtual assistant, such as Amazon’s Echo. Sales are projected to reach 2.2 million units (up 32 per cent) in 2016 and earn $392 million in revenue (increasing 32 per cent).

Smartphones: CTA projects unit shipments to reach 183 million in 2016 (up five per cent), while revenues will reach $55 billion (a four per cent increase). As tremendous innovations in smartphone hardware over the past few years have lengthened the replacement cycle, 2017 will be the first year smartphones see a slight decline in unit sales and revenue.

Televisions: The TV market will remain on par with 2015, with unit sales estimated to reach 39.7 million units in 2016 (down one percent) and revenues expected to reach $20 billion (a three percent increase). LCD TVs, the category leader, will contribute 38.9 million units (a one percent decline) and $19.2 billion (two percent growth). Key areas of growth are large screen sizes, 4K UHD and smart TV displays.

Tablets:After momentous growth and widespread adoption over the past five years, tablet sales will decline again in 2016. CTA expects sales of 65 million units in 2016, a two per cent decrease, and revenues of $19 billion, down five percent.

Laptops: Unit shipments of laptops are expected to reach 25 million units in 2016, a six per cent decrease. Revenues are expected to reach $15.8 billion, an eight percent drop.

“Technology is constantly and continuously reinventing itself, often cannibalizing its own growth before anything else does,” said Shawn DuBravac, Ph.D., chief economist, CTA. “The swath of emerging categories hitting the market in 2016 and the exponential growth of IoT are indelibly shaping the way we live our lives. How we use the internet, and the new products coming to market today, are changing who we are becoming.”